JUDGMENT

1. Heard the arguments of the learned counsel for the appellants in both these appeals as well as the learned counsel for the respondent No. 1 in Writ Appeal No. 5722/2001 and carefully perused the relevant case papers. Since the learned counsel for the other respondents as well as the learned counsel for the intervenors on I.A.1 and 2/2003 are absent, they could not be heard in the matter. However, in the absence of the learned counsel for the other respondents as well as the learned counsel for the interveners, we have been taken through the relevant case papers in detail by the learned counsel for the appellants as well as the learned counsel for the respondent No. 1 in Writ Appeal No. 5722/2001.

2. These two appeals arising out of a common order passed by the learned Single Judge of this Court and involving common questions of law and fact are conveniently dealt with together and they are accordingly disposed of by this common order.

3. It is stated that in pursuant to a policy declared by the Government on the floor of the Parliament during the budget speech of the Hon'ble Minister for Railways in the year 1999-2000, the appellants issued a tender notice No. 3/2000-2001 inviting sealed tenders from traders and other interested parties for leasing of Front Second class Luggage Rake (FSLR) of 4 or 8 tons and Ventilated Parcel Van (VP) of 18 tons capacity on the Broad Gauge on payment of lumpsum rate for loading of parcels by certain trains for a period of two years. These trains included, among others, Train No. 2627/2628, Bangalore - New Delhi - Bangalore - Karnataka Express (Daily). This was with a view to augmenting parcel earnings by the Indian Railways by leasing out the Front Second class Luggage Rakes and Ventilated Parcel Van in different trains all over the country. It is stated that the first compartment after the engine is known as “Front Second class Luggage Rake (FSLR)” and each Front Second class Luggage Rake comprises of four different sections. The first section immediately after the engine is meant for carrying on goods/parcels of 4 tons capacity and then comes the second section known as “Brake Van” occupied by the guard and thereafter comes the third section which is for carrying unreserved passengers and the last section is also a luggage compartment with a capacity of 4 tons. Even the last compartment in each train, which is known as “Rear Second Class Luggage Rake” also, comprises of four sections as in the case of Front Second class Luggage Rake. It is stated that depending upon the demand, sometimes Ventilated Parcel Van is added to a train after reducing, if necessary, a passenger compartment so as not to exceed a maximum hauling capacity of the engine. The said Ventilated Parcel Van is meant exclusively for carrying parcels and its normal capacity is 18 tons, It is stated that in any train, a Ventilated Parcel Van does not form an integral part, unless there is demand on account of accumulated parcels or parcel potential in that sector and also the availability of the parcel van. It is further stated that in the normal case, the luggage space available both in Front Second class Luggage Rake and Rear Second class Luggage Rake would be adequate to meet the normal demand. It was however noticed that in some trains, most of the times, the luggage capacity available in the Front Second class Luggage Rake and Rear Second class Luggage Rake was not being fully utilised and as a consequence the Railway administration was not getting adequate revenue there from. In view of this, it is stated that as a matter of policy decided by the Government of India that the luggage space in the Front Second class Luggage Rake be given on lease to traders and other interested petrous after inviting tenders from them. According to the appellants, this practice has been in vogue for quite some time from almost 1993 onwards and the reference made by the Hon'ble Minister for Railways in his budget speech was a reiteration of the existing policy of the Government of India. It is stated that the FSLR of train No. 2627 Bangalore - New Delhi - Karnataka Express (Daily) was leased for a period of two years from 8-6-2000 and 7-6-2000 at Rs. 19,800/- per 4 metric ton space per day. The lessee had agreed to pay for the two spaces each of 4 tons at that rate aggregating to Rs. 39,600/- per 8 tons per day. The lease was given in favour of a Company known as BIC Logistic Limited in pursuant to a tender issued by the appellants. The impugned tender notice sought to give on lease the Ventilated Parcel Van in the above train. Writ Petition No. 27568/2000 which was filed on or about 11-8-2000 sought to challenge the above Notification No. 3/2000-01 and it was the case of the petitioner that he is a trader in grapes and as a consequence of the appellants leasing out the VP in Train No. 2627/2728 Bangalore - New Delhi-Bangalore - Karnataka Express (Daily), it was denied of the facility of transporting grapes from Bangalore to New Delhi at the rates specified in the Coaching Tariff No. 24 Part III which came into effect on 1-4-2000. Writ petition No. 37150/2000 was filed on 27-11-2000 seeking a writ of mandamus to the appellants restraining them not to charge any tariff for the goods of the petitioner therein except the charge specified in the Coaching Tariff No. 24(III). It is stated that the petitioner in Writ Petition No. 37150/2000 is different from the petitioner in Writ Petition No. 27568/2000. But, however, both the petitioners claim that they are the traders in grapes, a perishable commodity and it was also their claim that they regularly dispatched to New Delhi and pay only the concessional rate specified in the Coaching Tariff No. 24(III). After the two writ petitions were filed, it is stated that the appellants herein entered appearance and filed their statement of objections. During the pendancy of these two writ petitions, it is stated that an important development took place in as much as the lessee in respect of the VP in the aforesaid train who took the same on lease for a period of two years from 26-8-2000, surrendered the same on 10-06-2001 and the lessee of the Front Second class Luggage Rake in the above said train who had taken up both the sections of 4 tons capacity surrendered one section of 4 tons capacity on 10-07-2001. The learned single Judge by his common judgment dated 25-07-2001 allowed both the writ petitions and quashed the impugned notification at Annexure-B holding that the awarding of contract of lease of Front Second class Luggage Rake and Ventilated Parcel Van is bad in law. Aggrieved, the appellants have preferred these two appeals.

4. Learned counsel for the appellants while assailing the impugned order the learned Single Judge, has contended as under:-

The learned single Judge grossly erred in holding that the power or the authority of the appellants to lease or otherwise dispose of the carrying capacity in the trains is only in accordance with sections 30 and 32 of the Indian Railways Act and further misdirected himself in holding that the provisions of the Indian Railways Act does not confer any right either to the Central Government or to the Railway Board to grant leasehold rights in favour of third parties for the purpose of transportation/carriage of passenger and goods in a train from one station to another by inviting tenders as has been done in this case. The learned Judge wholly misunderstood the scope and the purpose and the object with which the available parcel space in the Front Second class Luggage Rake and the Ventilated Parcel Van was sought to be exploited by the Railways for its advantage by getting maximum rate therefor without affecting the general public seeking to transport their goods for which purpose adequate provision was still available in each and every train. That granting of such leasehold rights cannot be said to be without authority of low. It is wholly misconceived to say that the appellants were seeking to substitute the rates fixed by the Central Govemment/Railway Board by calling for tenders and awarding leases at exorbitantly high rates in favour of third parties. That there has been adequate provision made by the appellants for the transportation of the goods belonging to the general public at the rates spacified by the Government of India/Railway Board as per the Railway Coaching Tariff No. 24(III) or any other rate as specified by the statutory authority, the complaint made was wholly misconceived and this aspect of the case has not been properly appreciated by the learned Single Judge. The object of granting leases at the higher rate in respect of certain carriage capacity in the trains had nothing to do with the rates for parcels and luggage fixed by the Government of India/Railway Board. When adequate provision has been made to meet the demands of the general public keeping in view the interest of the general public, either the respondents or any other similarly placed persons were not under the obligation to book their parcels only through the lessees. In the fast situation, the rights of the respondents are in no way affected on account of such action taken by the appellant-Railways pursuant to the policy declared on the floor of the Parliament. Under the circumstances, therefore, the learned Single judge was not justified in quashing the impugned notification which besides being not contrary to the interest of the general public was in pursuant to the policy decision taken by the Government to increase the revenue for the Railways. The entire grievance or the complaint of the respondents is purely imaginary and their apprehension is highly misconceived This is because on account of such action on the part of the Railways, the respondents are in no way affected. In fact pursuant to an order dated 28-1-2002 made by this Court, an affidavit came to be filed which would completely defuse or allay the apprehension or fear of the respondents if any, with regard to they being inconvenienced in transporting their commodities. The appellants-Railways will not hesitate to consider adding of another wagon to meet the contingencies of the requirements if the same is required in the interest of the general public. In the face of such an undertaking given in the form of an affidavit on behalf of the appellants, the grievance of the appellants will not survive That apart, as long as the Act does not prohibit and as long as it does not violate the fundamental right of any citizen, the action taken on the part of the Railways cannot be faulted. No doubt there is no provision to give the wagon on lease, but at the same time, there is no provision under the Indian Railways Act curtailing the appellants from doing so. Therefore, when there has been no such prohibition, it cannot be said that the appellants are acting illegally or without authority.

5. In support of his submissions, the learned counsel for the appellants in these two appeals has placed reliance upon the following decision:-

A.I.R 1984 SC 98 at page 108 relevant paragraph 21 (VIKLAD COAL MERCHANT, PATIALA v. UNION OF INDIA).

6. As against this, the learned counsel for the respondent No. 1 in Writ Petition No. 5722/2001 has contended supporting the order of the learned Single Judge as under:-

Section 70 of the Indian Railways Act is an implied prohibition on the part of the appellant-Railways in calling for such tenders. The only exception to Section 70 is Section 71 when the action of the appellant-Railways involves the public interest or the public cause. But by inviting such tenders, no public cause is going to be served and on the other hand, the interest of the public will be defeated by creating monopoly in favour of one person with regard to the mode of transportation. It would encourage the manopolistic trade practice. The public cause is defeated by such an act on the part of the appellant-Railways in calling for tenders and leasing out the space in the parcel service to a third person. The appellant-Railways in utter violation of Section 70 and 71 have issued the notification in the newspapare calling for tenders for leasing out the Front Second class Luggage Rake space of 4 or 8 tons and the entire 13 tons capacity in the parcel vans on payment of lumpsum rate for loading of parcels for a period of two years and the net result of the above notification is that out of the 34 tons carrying capacity of the train, more than half the capacity namely the entire carrying capacity of 18 tons of the parcel van is being exclusively reserved for one person who is offering the highest rate in the tender. The Central Government has not issued any special or general order as contemplated under Section 71 of the Act enabling the Railways to give special or preferential facility in the carriage of goods to any single individual person or firm which offers the highest lumpsum rate. That apart, only four tons of the train's carrying capacity is made available to the general public and out of the said 4 tons, the Railways are to accommodate the luggage of the passengers travelling in the train and also the transitment parcels and the perishable parcels that are offered by the respondents. More over since the grapes come under concessional parcel rate, the Railways refused to accept any consignment over and above 1.5 tons which are offered by the general public and accept only hard parcel which carry a higher tariff. Instead of accepting parcels offered by the respondents, the Railways have now resorted to leasing of virtually entire carrying capacity of a train to certain specified persons who are offering higher rates and this amounts to hostile and discriminatory attitude on the part of the appellant-Railways. The contemplated act on the part of the appellant-Railways will certainly affect the interest of general public and more so of the respondents who are grape merchants depending mostly on the Railways to transship their goods. When no sufficient space is made available to transport their goods, naturally they will be put at the mercy of the persons in whose favour the lease has been granted and ultimately the appellant-Railways would be virtually delegating the power of fixing the tariff rates to the contractors who are admittedly the transporters. Apart from the fact that there will be a delegation of power of fixing of the tariff rates to a third person, they will be virtually handing over the transportation system to a single individual instead of Railways themselves running the system. The contents of para 6 of the affidavit filed before this Court runs counter to the Government notification issued as per Annexure-R1 which says that during presentation of the Railway budget for the year 1999-2000, the Minister of Railways had announced that in order to increase the earnings from the parcel to Front Second class Luggage Rake in all trains should be leased out. Therefore, the assurance sought to be given by means of an affidavit appears to be only an imaginary one in the sense the same is contrary to the Government notification itself. In the rejoinder to the statement of objections filed by me appellant-Railways vide para 3, the respondents have specifically slated that the contractors are charging Rs. 8/- per k.g for transporting the consignment where as the Railways were charging Rs. 2.38 per k.g, for the transport of perishables from Bangalore station to Delhi with the result that after leasing out the space in favour of the contractors, they are charging exorbitantly at Rs. 8/- per k.g which is clearly arbitrary and illegal and is against the statutory provisions under the Indian Railways Act. Therefore, by inviting such tenders, the Railways are virtually leasing out its rights to fix tariff rales to the third parties who will be charging arbitrarily, which will be in clear violation of the tariff rates published by the Central Government-Authority. The power to revise the tariff rates is exclusively given to the Central Government under Section 32 and by resorting to such modes, the appellant-Railways are circumventing the provision contained in section 32 and giving arbitrary power to the contractor to charge any rate he likes. Having regard to these consequences of the act committed by the appellant-Railways that they will be delegating their power to a third person, it is highly impermissible for the appellant-Railways to issue such notification. That apart, the said act on the part of the Indian Railways amounts to privatisation more so when there is nothing to show that that Railways will regulate the rates. There cannot be any doubt that commercialisation is permitted, but not privatisation. Under the circumstances, therefore, the impugned order made by the learned Single Judge cannot be termed as either perverse or illegal so as to call for interference in the appeal.

7. In support of his submissions, the learned Counsel for respondent No. 1 in W.A No. 5722/2001 has relied upon the following decisions:-

AIR 1985 ALLAHABAD PAGE 314, relevant para 20 (DIRECTOR OF RAILWAY MOVEMENT (COAL) EASTERN RAILWAYS, CALCUTTA v. AKASHWANI GLASS WORKS, FIROZABAB)

(2002) 1 SCC 33, relevant page 37(F) (GHULAM QADIR v. SPECIAL. TRIBUNAL)

(1999) 3 SCC 696 (VIRENDER S. HOODA v. STATE OF HARYANA)

(1989) 2 SCC 58 relevant Para 59 (DISTRICT COLLECTOR, CHITTOOR v. CHITTOOR DISTRICT GROUNDNUT TRADERS' ASSOCIATION, CHITTOOR)

8. While placing reliance upon these decisions, the learned Counsel for respondent No. 1 has further contended that the policy decision taken by the Government is binding, if the same is not contrary to the Rules and in this case, the same being contrary to the provisions contained in Sections 70 and 71 as well as Sections 31 and 32 of the Railways Act, the same is not binding and hence, it could be interfered with. It was also contended on behalf of respondent No. 1 that the appellant-Railways cannot give unbridled power to a third party contractor, which virtually amounts to delegation of its power in the matter of fixing of the tariff rates which is clearly not permissible in law.

9. By way of reply, the learned Counsel for the appellants has further contended that Section 70 of the Act has got reference to the competing parties which is very clear from a reading of Section 70 of the Act and that further, from the words used therein it is clear that the Railway Administration shall not give any undue or unreasonable preference and in the instant case, the act committed by the appellant-Railways by calling for tenders pursuant to the policy decision will not amount to giving any undue or unreasonable preference to one competitor over another and on the other hand, it is only in the nature of increasing the revenue to the Railways which is permissible under law as Railways are also meant for carrying on commercial venture. He contended that even in the absence of Section 70 of the Act, the Railway Administration being a authority under Article 12 of the Constitution could not have discriminated between the parties who are similarly placed as it would be in violation of Article 14 of the Constitution. The action of the appellant-Railways in calling for tenders to give effect to the policy decision taken by the Government is well justified and it does not in any way affect the interest of the public which has been duly taken care of by the Railway Administration. He has also produced a working sheet to show that in calling for such tenders, the Railway Administration will be actually making a profit and to make profit, being a commercial venture, the Railway Administration is not prohibited from doing so.

10. In support of his submissions, he has further relied upon the two other decisions of the Hon'ble Supreme Court reported in AIR 1958 SC PAGE 525 (RAIGARH JUTE MILLS LTD. v. EASTERN RLY.) relevant para 8 and AIR 1987 SC PAGE 2414 (Delhi Cloth & General Mills Ltd. v. Union Of India).

11. Having heard the submissions on both sides at a considerable length and having carefully perused the relevant case papers in the light of the decisions relied upon by the learned Counsel on either side, the short question for consideration is ‘whether the impugned order of the learned Single Judge warrants any interference in these appeals'.

12. The notification at Annexure-B which is the subject matter of challenge by the respondents doss not in any way indicate that it was issued under Sections 30 and 31 of the Indian Railways Act. On the other hand, it is stated that it is a policy decision of the Government to issue a tender notice No. 3/2000-01 with a view to augment the parcel earnings by the Indian Railways by leasing the FSLRs and VPs in different trains all over the country. This is very clear from the government notification which is produced as per Annexure-R1 at page 78 dated 26/30.03.1999 which inter alia reads that during the presentation of the Railway Budget for the year 1999-2000, the Ministry of Railways had announced that in order to increase the earnings from the parcel traffic, the front SLRs in all the passenger trains should be leased out and in pursuance of the said announcement made by the Ministry of Railways, the Board has decided to introduce a revised scheme for leasing space in the front SLRs of all passenger trains. The broad features of the scheme are specified under the said government notification at Annexure-R1. It is to be seen therefore that the impugned notification came to be issued on account of a policy decision taken by the government in this regard. The said policy decision was taken with a view to augment or to increase the earnings from the parcel traffic. It is needless to point out that the Railways are run as commercial undertakings, That being so, such a policy decision taken by the Railway Administration cannot be opposed to its avowed object. It is no doubt true that the Railway Administration should also keep in mind being a instrumentality of the State to serve the national interest. So long as the public interest is not affected, the Railway Administration cannot be prevented from taking out any steps which are in the nature of commercial undertaking to increase its income. It needs to be noted that in matters of economic rights and policy decision, the scope of judicial review is limited and circumscribed. The Railways or the Railway Administration may not be dictated by the only consideration of the provisions contained in Sections 30 and 31 of the Indian Railways Act. The anxiety of the respondents and the interveners in the matter can be appreciated, but the policy decision of the Government and the consequential State action in inviting such tenders cannot be quashed as being opposed to Sections 30 and 31 of the Act. Sections 30 and 31 of the Act operates in different fields and the policy decision taken by the Government pursuant to which such a notification has been issued does not in any way oppose to Sections 30 and 31 of the Act. But at the same time, we are not unmindful of the fact that by resorting to such action, the Railway Administration should not create a situation whereby the contractor would exploit the general public or the users of the Railway service for transportation of their commodities. To see that such a situation does not occur, we feel that certain amount of regulatory check is needed over the tariff rates that may be charged by the contractor white accepting the parcels for transportation through Railways, this is because, we find from the relevant rase papers that the persons to whom such rates will be sold are the transporters. Obviously, being transporters, they would be interested in making profits out of such venture and certain amount of check is needed to prevent the said transporters from exploiting the situation. If such a regulatory check is imposed, probably, the respondents may not have any grievance at all. By regulatory check, we mean that the Railways or the Railway Administration should fix the outer limit or upper limit of rates chargeable for different trains so as to disable them from exploiting the situation under certain contingencies which gives a regulatory check upon the unbridled power to the contractor to fix the tariff indiscriminately or arbitrarily. Therefore, if the fare to be charged from the acceptors of the bid or the contractors who are mainly transporters, is fixed, this would allay the fear of the general public like the respondents that the contractor may charge the fare arbitrarily and try to exploit the situation to his advantage affecting the public interest. Further if the fare to be charged is fixed and does not vary with the amount of bid offered by the contractor, it would not have any effect on the price of the commodity to be transported. No doubt, it was sought to be argued on behalf of respondent No. 1 that the said policy decision is clearly opposed to the provisions contained in Sections 70 and 71 of the Indian Railways Act. According to the learned Counsel, the act of inviting of such tenders by the appellant-Railways as per Annexure-B is quite contrary to law inasmuch as it is in clear violation of Sections 70 and 71 of the Act. But then, as rightly submitted by the learned Counsel for the appellants that if the respondents were to complain against the Railway Administration that the provisions of Section 70 of the Act have been violated or contravened, then, they must establish that there has been undue preference between them and their competitor and also their goods on the one hand and the goods of their competitor on the other hand. In this case, no such material has been placed on record to show that there has been such discrimination between the two competitors. That is to say, no such tangible material had been produced to justify such grievance under Section 70 of the Act. In this connection, a reference may be made to the two decisions of the Hon'ble Supreme Court relied upon by the learned Counsel for the appellants reported in AIR 1987 SC Page 2414 and AIR 1958 SC Page 525. Now coming to Section 71 of the Act, it is to be stated mat it deals with overriding power of the Central Government with regard to general prohibition against discrimination under Section 70 of the Act. That is to say, Section 70 of the Act prohibits discrimination by giving unreasonable, or undue preference in respect of any person or traffic between two competitors, but this general prohibition against discrimination is subject to the overriding power conferred on the Central Government under Section 71 of the Act. We are unable to understand as to how these two provisions could be taken advantage of to further the case of the respondents. Here, in this case, the respondents have not been able to demonstrate before the Court as to how their rights are going to be affected by the act of the appellant-Railways in calling for such tenders pursuant to the policy decision taken by the Government. No doubt, it was sought to be contended on behalf of respondent No. 1 that by resorting to such method, the space available for parcel service will be reduced and thereby the interest of the respondents will be affected as it may not be possible for them to transport their goods, more so, the goods like grapes which are perishable in nature by a quickest mode of transportation on land. Though the said argument on the part of the respondents appears to be attractive at the first blush, but, on further probing into the matter, we find that the said contention is without any merit, more so, when there is a specific undertaking given on behalf of the Railway Administration to the effect that by resorting to such method, the interest of the general public will not be affected and on the other hand, it will be duly taken care of if necessary, by adding some more space for the parcel service. Apart from this, whatever apprehension or fear that the respondents have in their mind will be diffused or allayed by introducing certain regulatory check over the tariff rates to be charged by the third party contractor. This is a pure and simple contract of leasing out the front second class luggage rake of 4 or 3 tons and ventilated parcel van of 18 tons capacity on the broad gauge for loading of parcels in different or certain trains, which is the property of the Central Government where one and only criteria for consideration would be revenue to the Central Government. The awarding of contract by inviting tenders is considered to be one of the fair method. This is not a contract of supply where the contract by manipulating the price may cause loss to the public at large. Payment of bid amount is purely a matter between the contractor and the Union Government. As a matter of fact obtaining higher revenue by accepting the highest eligible bid would only be in the public interest because the Central Government stands to gain more revenue. The offering of the bid after knowing the commercial value of the contract is a matter left to the business acumen or prudence of the tenderers. No third party's interest is involved in such contract. If the Central Government decided to give its largesse to the public, it has an obligation to see that it fetches the best possible value for the same provided it does not in any manner affects the rights of other citizens. It was found by the Union Government that in some trains most of the times the luggage capacity available in the FSLR and RSLR was not being folly utilized and as a consequence, the railway administration was not getting adequate revenue therefrom and hence decided by the Government of India as a matter of policy decision that the luggage space in the FSLR be given on lease to the traders and contractors after inviting tenders, in order to augment its revenue, which policy of the Government cannot be considered to be either arbitrary or unreasonable. Principle of monopoly also does not come into play in such type of contract. In the fact situation, the appellant-Railway Administration cannot be prevented from issuing such notification pursuant to the policy decision of the Government which is very much needed to augment its revenue and such a thing is quite permissible when the Railways are run as commercial undertakings also besides serving the national interest. So long as the policy decision of the Government does not affect the general interest of the public and so long as it is not in violation of law, the same cannot be vitiated. It cannot therefore be said that this venture taken up by the appellant-Railway Administration as per the policy decision taken by the Government of inviting tenders violates either Section 70 or Section 71 of the Act. But however keeping in mind that the interest of the public should not suffer apart from the undertaking given by the Railway Administration in the form of an affidavit filed before this Court pursuant to an order made on 28.1.2002, we are also persuaded to issue certain direction to be observed by the Railway Administration in calling for tenders that it should fix the outer limit or the upper limit of rates changeable by the contractor for different trains which gives a regulatory check upon the unbridled power of the contractor in fixing the tariff rates white accepting the parcel service of the third parties. Except issuing such directions, we find that it is neither just nor proper to quash the notification issued by the Railway Administration pursuant to a policy decision taken by the Government in this matter. We therefore find that the order of the learned Single Judge cannot be sustained in law and it is liable to be set aside.

13. In the result, therefore, these two Writ Appeals filed by the appellants in W.A Nos. 5722/2001 and 5723/2001 are allowed with the above observations and directions and the impugned order made by the learned Single Judge is hereby set aside. Consequently, I.A Nos. I and II of the interveners will not survive for consideration and they are accordingly, dismissed. But in the circumstances of the case, there is no order as to costs.

14. The appeals are accordingly allowed subject to the above observations and directions which should be strictly followed by the Railway Administration in calling for tenders.